Oil prices edged higher in Asian trade on Thursday as diplomatic efforts between the U.S. and Iran continued alongside heightened military activity in the Middle East, keeping supply disruption concerns alive.
Brent crude rose 24 cents (0.3%) to $70.59 a barrel, while U.S. West Texas Intermediate (WTI) gained 28 cents (0.4%) to $65.47 by 0415 GMT. Both benchmarks had surged more than 4% in the previous session, marking their highest settlements since late January.
The primary market concern remains potential disruption to shipments through the Strait of Hormuz — a critical artery that handles nearly 20% of global oil consumption. Any escalation in tensions could impact flows through the region.
While talks in Geneva showed limited progress, significant differences remain. The White House indicated that further proposals from Tehran are expected in the coming weeks. Meanwhile, Iran announced planned rocket launches in its southern region, and the U.S. has deployed additional naval assets nearby.
Despite elevated rhetoric, analysts suggest a full-scale conflict remains unlikely, with markets adopting a cautious wait-and-see stance.
Supporting prices further, data from the American Petroleum Institute showed declines in U.S. crude, gasoline, and distillate inventories last week, defying expectations of a build. Official figures from the U.S. Energy Information Administration are due later Thursday.
Overall, geopolitical risk premium and tighter U.S. inventories are underpinning crude prices in the near term.
Frequently Asked Questions
Why are oil prices rising?
Oil prices are gaining due to renewed geopolitical tensions between the U.S. and Iran, raising concerns about potential supply disruptions in the Middle East. Diplomatic talks are ongoing, but increased military activity has added a risk premium to crude markets.
Why is the Strait of Hormuz so important for oil markets?
The Strait of Hormuz is one of the world’s most critical oil transit routes, carrying nearly 20% of global oil consumption. Any disruption to shipping through this waterway can significantly impact global supply and push prices higher.
What role are U.S. oil inventories playing in price movements?
Recent data from the American Petroleum Institute showed a decline in U.S. crude and fuel inventories, contrary to expectations of a build. Falling stockpiles suggest stronger demand or tighter supply, which supports prices. Official data from the U.S. Energy Information Administration will provide further confirmation.
Are markets expecting a full-scale conflict between the U.S. and Iran?
Most analysts believe a full-scale conflict is unlikely at this stage. While tensions remain elevated, markets are currently pricing in precautionary supply risks rather than a prolonged war scenario.
What should traders watch next?
Key factors include:
Developments in U.S.–Iran negotiations
Any disruption in Middle East oil shipments
Official U.S. inventory data
Broader geopolitical developments, including Ukraine-Russia talks
These elements will determine whether oil extends gains or sees profit-taking in the near term.
